Financial Capability of Low-income Workers: Insights from Bangladesh’s Readymade Garment Industry

Abstract

Purpose: A growing body of knowledge describes financial capability as financial knowledge and skills, a combination of financial behavior, or having knowledge and the opportunity to apply it. However, developed knowledge has rarely focused on the financial capability or functioning of the low-income working class constrained by resources and opportunities. This study investigates the financial capability of Bangladesh’s low-income readymade garment (RMG) workers, focusing on their financial knowledge and behavior. Methodology: This study has conducted six focus group discussions (FGD) and ten in-depth interviews with RMG workers. The participants for FGDs and indepth interviews are selected purposively covering three industrial cities – Dhaka, Gazipur, and Narayanganj. The FGDs and interviews are analyzed thematically. Findings: The study finds that workers lack knowledge and skills regarding financial products and services and their associated charges and are also very present-focused in financial matters. This research also exhibits the challenges of workers in money management, future planning, information collection and utilisation, and financial product management. Practical Implications: The study contributes to the understanding that lack of knowledge, insufficiency of income, and lack of trust in financial institutions shape the financial functioning of the low-income RMG workers and suggests wage reform and inclusive financial policy for the workers. Originality/Value: This study determines the financial capability of lowincome RMG workers focusing on cognitive and behavioral aspects. It fills the research gap on the financial capability of the low-income working class of Bangladesh in general and the RMG industry in particular. Limitations: The study’s results cannot be generalized for low-income workers of other industries as the data is collected from some purposively selected RMG workers. Additionally, the study relies on self-reported data, which may be subject to recall or social desirability bias. The absence of a mixed analysis method is another limitation of the study.